InvestMaryland Day canceled

Turns out you can’t out-lobby the snow.

The Department of Business and Economic Development had to call off its event Thursday morning promoting InvestMaryland after a round of “thunder snow” socked the state.

DBED was expecting 300 people to show at the four-hour event promoting the program (InvestMaryland, not thunder snow) that is the top economic proposal in Gov. Martin O’Malley’s 2011 legislative agenda. O’Malley was set to address the crowd at 9:15, but a spokeswoman, in an email, said the entire event had been called off due to the weather.

The proposal would fill a $100 million venture fund by selling tax credits to insurance companies. The fund, half controlled by private venture firms and half by a state-appointed consultant, would focus on early stage, high-tech firms. The private investors would return all of the principal and 80 percent of the profits to the state.

DBED had lined up tech entrepreneurs and others to speak at their event and drum up support for the program.

No word yet on whether it will be rescheduled.

O’Malley’s budget cuts transportation, Medicaid reimbursements

House Speaker Michael E. Busch, D-Anne Arundel, said Friday morning Gov. Martin O’Malley’s budget proposal would cut state and highway transportation dollars, K-12 education funding and Medicaid reimbursements to hospitals.

The budget also includes a 3 percent hike in college tuition at state universities, and changes to public employee pensions, which would require state workers to pay more to maintain the same level of retirement benefits.

“I think we’ll tinker with all of it,” Busch said. “I think we’ll definitely tinker with Medicaid.”

He said hospitals would see $250 million less in reimbursements in fiscal 2012 than they will this budget year.

O’Malley is scheduled to release his budget proposal this afternoon. He has called his budget, which will have to bridge a $1.6 billion deficit, “the first word, not the last word.”

City and county governments can expect to see the same reduction in highway aid as they did the last two years — a 90 percent cut to the funding formula. And Busch said some state highway projects have been cut as well.

Some lawmakers have pushed to increase transportation funding this year. Senate Majority Leader Rob Garagiola said he will introduce a bill to raise between $400 million and $600 million annually for transportation projects.

O’Malley, during an hour-long interview on WTOP this morning, acknowledged the need for increasing transportation funding.

“We do have a huge backlog of [transportation projects] that need funding, including mass transit,” he said.

State aid to public education would be less than this year, Busch said.

“I actually thought there would be more cuts education,” he said. “We knew there were going to be tough decisions that have to be made.”

Asked if the proposal made increases to the alcohol or gas tax more palatable, Busch said: “I don’t see a groundswell of anybody in the General Assembly that wants to raise revenues.”

Basu: Spend more on economic development

Anirban Basu, chairman and CEO of Sage Policy Group Inc., told a group of state senators Thursday they should pump more money into the Department of Business and Economic Development’s efforts to retain Maryland companies, and woo those located in other states.

Adding more money to the DBED budget will be a tall order. The department has suffered budget cuts in recent years and Gov. Martin O’Malley, in his proposal to be released Friday, will have to bridge a $1.6 billion deficit.

The governor has floated cuts to education and health care, but said the state will maintain its funding of county teacher pensions in the coming fiscal year. At a recent event, DBED Secretary Christian Johansson said the budget process will be “brutal.”

But that, Basu said, is precisely the reason to invest more now in attracting businesses and jobs to the state.

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DBED’s Johansson talking up $100M venture fund

Economic Development Secretary Christian Johansson was working the State House lobby between the House and Senate chambers Thursday morning, cornering lawmakers after they wrapped up their quick floor sessions.

“I’m making sure the General Assembly understands the opportunities Invest Maryland offers,” he said in between quick chats with Senate Finance Committee Chairman Thomas M. “Mac” Middleton and Sen. James E. DeGrange Sr., who chairs a pair of budget subcommittees.

“This is the governor’s signature economic legislation,” Johansson said.

The Invest Maryland proposal would fill a $100 million venture fund targeted at high-tech, early stage start-ups by selling tax credits to insurance companies. Essentially, the insurance companies would pay their taxes ahead of time at a discount and the state would use that revenue to fill the fund.

A similar measure was pushed late in the 2010 session, but the Department of Business and Economic Development and legislators disagreed over control of the fund. DBED wanted a 50-50 split, with half of the fund controlled by the department and half by private firms. Lawmakers wanted to put more in the hands of the private investors, who would return principal and some of their earnings to the state.

Invest Maryland will be part of the governor’s legislative agenda expected to be introduced next week.

“We’ve had some good conversations,” Johansson said when asked how his lobbying effort was faring.

Cold, clouds break for O’Malley inauguration

After what has seemed like months of frigid cold, ice and snow, Annapolis got a dose of sunshine and temps in the mid-40s (downright balmy if you’re not standing in the shade) during the outdoor inaugural ceremony for Gov. Martin O’Malley.

That lead to one of the quotes of the day, from U.S. Sen. Barbara Mikulski, who introduced the governor.

“It is only the O’Malley luck of the Irish that could bring out the sun on a day like today,” she said. “Remember the forecast? Stormy weather. O’Malley changed that. Remember the economic forecast? O’Malley’s going to change that, too.

But the best line of the day came from MPT reporter Lou Davis, who was providing live commentary of the swearing-in ceremony in the Senate chamber. After taking the oath of office, O’Malley was shown shaking the pen he had tried to use to sign his name to the official book.

“He’s using one of those ceremonial pens,” Davis said, “provided by a low bidder.”

Kittleman resigns from Senate GOP leadership

Sen. Allan H. Kittleman, R-Howard and Carroll, announced Tuesday he would relinquish his post as the top Republican in the Maryland Senate.

In a brief interview, Kittleman, who has been leader since 2008 and was whip before that, said the decision was made because he is more socially moderate than his caucus. His support of civil unions “is certainly part of it,” he said. “There are other issues too.”

“To me,” Kittleman said, “standing up for my principles is more important than being minority leader.”

He said he was not asked to resign, and “could have stayed minority leader if I wanted to.”

In a letter to Minority Whip Sen. David Brinkley, R-Frederick, Kittleman wrote “it was apparent that the majority of the caucus members do not want a fiscally conservative who is also a social moderate as the leader of the caucus. Therefore, while it has been a privilege to lead the Republican Senate Caucus for the past two years, I feel it would not be in the best interest of the caucus for me to continue as their leader.”

Kittleman’s resignation will take effect Friday, when the 12 Republicans will vote on a new leader.

Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s, praised Kittleman for his work “as a fine statesman”

“Sen. Kittleman did a fine job,” he said. “He’s a fine man.”

“But we’re in Maryland”

I meant to get this quote from House Speaker Michael E. Busch, D-Anne Arundel, into a story or blog post yesterday. I didn’t. Here goes.

“If we were in the state of Montana we’d be teaching our kids to go out and hunt elk deer. And it’d be fine,” he said. “But we’re in Maryland.”

He was speaking at the Maryland Economic Development Association conference and, as he often does, argued forcefully in favor of maintaining the state’s funding of public education. Busch said the state needs to keep its workforce highly educated and nimble enough to meet the needs of the government facilities, labs, universities and the contractors that serve them in ever-changing fields.

“You have all this money coming into the state,” Busch said. “You better have an educated workforce.”

Busch’s (first) quote, while not only pithy, is illustrative of the divide between Democrats and Republicans on the job creation and economic recovery issue, and the arguments we’ll hear on economic issues throughout the recession.

The Democratic on job creation and the economy — made clear by Gov. Martin O’Malley during the election and reiterated there by Busch — is that the state must provide the workers and the high quality life to compliment the federal money flowing into Maryland, and the businesses will come. Republicans argue for less government — holding steady or cutting taxes, eliminating the oversight that is unnecessary and refining the oversight that is overly burdensome. Remember former Gov. Robert L. Ehrlich Jr. during the election? He wanted to clean out state business regulators with a “power hose.”

“Private enterprise figures out how to do the same job or a better job with less. We need to bring some of those pressures to bear on government,” Del. Anthony J. O’Donnell said at the MEDA event.

Md. Senator wants at least $400M more for transportation

Sen. Rob Garagiola, D-Montgomery, said Friday he’s working on a bill that would increase the state’s transportation funding by at least $400 million every year.

(Tip of the cap – as much as you can tip the beanie I’ve been wearing lately – to the Potomac Patch.)

The specifics are “still crystallizing” as Garagiola vets the proposals, he said.

“Just to keep up with maintenance and road repair and keep projects moving forward, we need an infusion of capital,” he said. “We can’t afford to wait.”

Garagiola said the state needs to make up the $350 million or so the recession has cost the Transportation Trust Fund. He said he’s aiming for between $400 million and $600 million in revenue with his bill, through a range of funding mechanisms.

Count on seeing a gas tax increase in there, though Garagiola said he’s not sure how much of a hike he will push for. That tax has not been raised since 1992, when it was set at 23.5 cents per gallon.

The bill could also feature a provision that would wall off transportation funds, preventing the fund transfers governors have used for decades to pay for new Medevac helicopters and balance the general fund budget.

With little appetite for tax increases this year, Garagiola has an uphill slog on his hands to get a bill like this passed. He’ll likely find a sympathetic ear in Senate President Thomas V. Mike Miller Jr., who has long advocated for a gas tax hike.

We may also see something along these lines from the Blue Ribbon Commission on Transportation Funding. (That group was created by a bill Garagiola introduced last year, by the way.) The issue is being watched closely by business groups, vocal supporters of a gas tax hike to keep the state’s transportation infrastructure in shape. Both Kathleen T. Snyder of the Maryland Chamber of Commerce and Donald C. Fry of the Greater Baltimore Committee speak emphatically of the need for more transportation dollars on Thursday at a Maryland Economic Development Association conference.

“It’s not only saving our roads,” Garagiola said of the bill-in-progress, “I look at it as economic development.”

Tone down the rhetoric?

The national debate over toning down, well, debate following the shooting of an Arizona congresswoman last week has echoed in Annapolis at the start of the 2011 legislative session. But even that has led to terse exchanges between party leaders.

(Here’s the latest, by the way, on the remarkable recovery of Rep. Gabrielle Giffords, D-Ariz.)

“We need to lower the rhetoric on both sides,” Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s, said Thursday at a Maryland Economic Development Association conference.

Miller said more civility would lead to more compromise on the big issues facing the state this year.

“Hopefully, as we get to the $1.6 billion problem, we can reach across the aisle,” he said, referring to the gaping budget deficit lawmakers and Gov. Martin O’Malley will have to bridge before the end of the session.

House Minority Leader Anthony J. O’Donnell, R-Calvert and St. Mary’s, who participated in the MEDA panel discussion with Miller, said ratcheting down the discussion too much could be “stifle” debate.

And with 43 Republicans in the House to 98 Democrats, O’Donnell’s role is as much about forcing debate as it is crafting policy and, as he said, stopping “groupthink.”

“The Republicans and the partisan divide in this state aren’t stopping anything,” he said. “We don’t have the votes to stop anything. But we do give voice to other ideas, to the opposition.”

Miller quickly cut in with “intelligent discourse is encouraged.”

Middleton: unemployment insurance changes coming… eventually

For those of you who thought the unemployment insurance issue was behind you, think again.

Sen. Thomas M. “Mac” Middleton, the chairman of the Senate Finance Committee and lawmaker who hammered together the UI compromise last year, said he’s preparing for negotiations between business and labor interests to up weekly unemployment insurance benefits. It appears the issue could be on the back burner this session, with health care and wind power taking up the lion’s share of the committee’s time.

“We’re gathering information now,” Middleton said of the UI issue.

As part of the deal reached last year, business and labor groups agreed to find a way to bump up the maximum weekly benefit up to 54 percent of the average weekly wage in the state. To balance that increase, that group will have to find a way to shrink the pool of unemployed workers who receive benefits.

That issue of cost neutrality was at the center negotiations last year, with business groups seeking cost reductions to balance the expansion of benefits Gov. Martin O’Malley proposed to win the state $127 million for the Unemployment Insurance Trust Fund.

On a side note, I’ll be dusting off my @TDRNick twitter handle to shoot out observations from the session, interesting tidbits and hints about what you’ll find in the next day’s dead tree edition of The Daily Record. So, follow me there or my feelings will be hurt.